News and Press
Pensions 2012 - Implications for Registered Social Landlords

Pensions are currently dominating finance directors' thoughts and the political agenda. Faced with an ageing population, employers in both the private and public sector now have to finance pension obligations for longer than originally forecast.

New compulsory Personal Accounts are being phased in from 2012, with a mandatory 3% employer contribution, unless you have a 'qualifying scheme'. Registered social landlords (RSLs) need to consider their 'unpensioned' employees and the additional employment cost that Personal Accounts will impose. Failing to comply could result in a minimum fine of £50,000.

Sasha Butterworth, head of Pensions at TLT says, "Generally, RSLs with ex-public sector employees participate in either the Social Housing Pension Scheme (SHPS) or the Local Government Pension Scheme (LGPS), to meet local authorities' Best Value requirements on a stock transfer. These specify participation in the LGPS or a broadly comparable defined benefit pension scheme, where benefits are based on the length of pensionable service and the member's salary at retirement or leaving service.

"RSLs should be aware of the new look LGPS, introduced from 1 April 2008, which has an improved accrual rate for defined benefits but higher employee contribution rates and no automatic cash lump sum. Alternatively, SHPS offers three new options to consider including defined benefit; career average revalued earnings (CARE) based on annual salary; and a new defined contribution option, based on the contributions paid in, the investment growth and annuity rates on retirement, which will be a 'qualifying scheme' for Personal Accounts."

Sasha explains, "For new and current 'unpensioned' employees, RSLs need to consider how to comply with their obligations under the new Personal Accounts, which are being phased in from 2012 - 2016. Employers will be able to use their own pension arrangements if they meet the requirements as a 'qualifying scheme', which would exempt them from Personal Accounts.

"RSLs need to begin consultation on SHPS options now if they want to change benefits and take advice from a specialist pensions lawyer to review current pension arrangements to start planning for the introduction of Personal Accounts. If RSLs are tendering for a Best Value contract, they should consider whether LGPS or SHPS is a better option."